Overpay mortgage or invest

F

Frank

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I am currently in a position of saving about 800 a month for the last year.

I have managed to build up about 40,000 in savings in CU and current account.

Obviously there is no return where the money is sitting now.

Mortgage on my home is about 200,000 interest and capital
Mortgage on investment is also about 200k interest only (18 years left)
Both are with BOS on tracker.

Should I put extra money into one or other of the mortgagtes. Maybe drop 20,000 off one of them.

Should I set up some sort of long term investment lump first then ongoing deposit.

Thanks
 
A lot depends on what interest rates you are paying. If you are paying good rates, there is less of an incentive to pay the mortgage off than if the rates are high.
 
If you do decide to pay anything off, offset it against your private home & NOT the investment property as that interest is tax deductable (75% of the interest paid for 2009).
 
sam h said:
If you do decide to pay anything off, offset it against your private home & NOT the investment property as that interest is tax deductable (75% of the interest paid for 2009).
Click to expand...

Wait until after the budget as this may change.
 
If you are able to save, why is your investment mortgage on Interest Only?
 
My guess is that you're paying out something over €2K a month on both the mortgages, but your income + income from the invesment (?) minus living costs & the mortgages still leaves you with €800 a month.
The first question is how secure are both your incomes. Don't forget we have a budget on Wed.
It looks like you're in a good position, in the current climate I would be trying to keep a 6-12 month rainy day fund.
 
i would put 20K against your home mortgage, as if you ever need to change your mortgage you will have the option to 1) get a better rate due to you own more of your home and 2) you will pay less interest. It does however depend on the rate you are currently getting as you know the interest rates are currently very low but the ECB are looking to increase their base rate early next year.
 
NHG said:
If you are able to save, why is your investment mortgage on Interest Only?
Click to expand...
Because the Govt kindly subsidises his investment by allowing him to write off all interest against tax. He is better off going interest only and keeping his capital on deposit. Ain't our Govt nice?
 
Change of Job changed my income after the investment was set up.
I also was able to get rid of a private car which gets rid of the black of money that is car ownership.

Interest only was the only option I had at the time, now despite the economies best efforts I am in a better position work wise, although nicely balanced out as both properties are probably just above break even against current mortgages. I know I am very lucky to be in such a position considering the pain so many others are going through.

I am waiting for one more thing to fall into place to make the job 99% secure (nothing 100%) before changing anything too drasticaly, This should all happen within the next few weeks.

I have been diverting 800 a month into CU as savings to make sure I could handle the loss of tenants in investment property, This also allows a few bob for rainy day big outlays in the investment property.

The Trackers are both very good rates, got there just in the nick of time. 1.5 and 1.75 above ECB.

Thanks for all the replies plenty of fruit for thought.
 
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